The Times of India THURSDAY, JANUARY 03, 2002
It'll take a decade to remove yuan controls: China BEIJING: Chinese state media said Thursday it would take another decade before the country opened up its capital accounts and entirely removed controls on its currency. The recently emerging threat of a plunging Japanese yen has served to underline the need to be careful about liberalization in the field, the Xinhua news agency said in its online service. "In the coming 10 years, China should not rashly open up its capital account," Xinhua said. China liberalized its current account for transactions in goods and services in 1996, while its capital account remains closed. The local currency, the yuan, is effectively pegged to the US currency at about 8.28 to the dollar, although local officials refer to the foreign-exchange system as a "managed float." "The yuan should maintain its long-term stability under the managed-float system in order to prevent excessive international capital flows and the spread of financial crises, and in order to cope with a Japanese devaluation," Xinhua said. China previously said it would open up its capital account by the year 2000, but that deadline was later abandoned, as policy makers got cold feet from the turmoil of the 1997-1998 Asian financial crisis. Xinhua said China's entry into the World Trade Organization, which formally took place on December 11 last year, also means opening up the capital account is not a short-term prospect. "Over the next decade, China should concentrate its efforts on the economic restructuring necessitated by WTO entry," Xinhua said. "We cannot fight a two-front war at the moment. We must first look inwards (in carrying out reform), and then outwards," the agency said. ( AFP ) Copyright © 2001 Times Internet Limited. All rights reserved.
